When the war of 1914-18 came to an end, the fighting nations found themselves reduced to a state of near bankruptcy. This reacted on trade and commerce and paralysed the economic life of the people. Nations began to disclaim debts: industries became idle for want of markets; the free circulation of money was checked.

National rivalries and jealousies became acute. There seemed no hope for an economic revival. In order to avoid an economic breakdown of the greater magnitude, after the Second World War, politicians began to think out plans of Post-War Reconstruction even before the war ended.

For quite a long time Soviet Russia had been organizing her economic life on a planned basis, started under the leadership of Lenin as New Economic Plan. Her Five-Year Plans boldly carried into effect the schemes of economic reconstruction. The full effect of these was seen in her unique resistance to German aggression. Her example has been an eye-opener to the rest of the world. People all over the world have become alive to the enormous utility of developing the resources of a nation according to plans drawn up by experts.

Furthermore, formerly Governments adopted a negative attitude to the welfare of the workers. The workers were given wages extremely low, as in Japan or India, or comparatively high, as in England and USA. This led to periodic strikes and lock-outs, and consequent loss to the capitalists in the shape of less profits and to the Nation in the shape of less production.


Now a new conception of the duty towards the workers has come into existence; workers have the right to live decently; they have the right to leisure, to education, to old-age pension, to decent houses. In order to do this, there must be organized efforts Wealth must be distributed more equitably. Hence, the State must act on a large policy of national welfare. This is especially necessary, if the attention of workers in other countries has to be diverted from the ‘menace’ of communism. New system also implemented the policy of planned economy.

These are the reasons why, even before the War had come to an end, people were dreaming of Post-War reconstruction. The capitalists think in terms of increasing the purchasing powers of the people. This is the American idea. The Britishers, as seen in the Beveridge plan, are attempting to ensure a more comfortable life to the workers, without disturbing the existing economic structure. They look forward to a time when the various nations will pool together their resources and settle on a policy designed more or less to meet their common ends. So welfare of the people is at the centre of a plan in these days of market economy. The European Common Market with a new currency is also an attempt for the capitalist to survive.

India also has her plans of reconstruction. These are based largely on foreign capital and economic aid as also liberalisation. They depend on the success of the several multi-purpose schemes. There were also plans for liquidation of zemindars-, for nationalization of industries, for afforestation, for construction of towns and mega cities and many others. Some are being implemented; others are on the anvil. But they suffer from a basic defect.

Unlike the Soviet plans, they are imposed from above. In Soviet Russia, “each plan marked an intention which millions of people through their organi­zation, co-operated in defining, to carry out a common task for the common benefit” (J.D. Benegal).


They never forgot Lenin’s advice: “Mistakes are inevitable—no human being is perfect. The important thing is not to make any mistakes, but to make few and small mistakes, and learn from them.” In India as many as eight Five-Years-Plans have been implemented, with thrust, first on the agricultural sector and then on heavy basic industries.

Each Five-Year-Plan promised to provide employment for million. But at the end of each Plan-period, short-fall was found there. It was always put down to overgrowth of population that offset and affected the good effects of the Plans.

The present situation is that there is a permanent Planning Commission, with the Prime Minister as the Chairman, to solve effectively the economic ills. The prospect is now bleak with foreign debt amounting to astronomical figures, multinationals dominating the industrial field and enormous deficit financing as the order of the day,